Parents: University Funding

Posted by siteadmin on Tuesday 22nd of March 2016.

The £9,000 a year maximum tuition fee for new students in England and Wales is for now a fact of student life. Even the limited maintenance grants system in England will end for new students in the 2016/17 academic year, meaning that all maintenance assistance will be by way of loans.

If you have children likely to go to university, it makes sense to consider your funding options.  For example, JISAs are a potentially valuable tool to build up a fund by age 18. For those who prefer a greater degree of control over the student's access to the investment at age 18 (while retaining tax efficiency) collective investments held subject to an appropriate trust can look attractive, as could an offshore investment bond.

Despite these tax-efficient "pre-funding" opportunities, under the current rules some pundits consider that it makes sense to take the student fee loans while at university rather than pay fees from capital. That is because repayment only begins once earnings reach £21,000 and any debt is written off after 30 years from the April after graduation. The Office for Budget Responsibility projects that when the first 30 year period ends in 2048/49 the government will have to write of £20bn of debt.

University debt will add to the difficulties young people face in getting onto the now rapidly rising property ladder.  Another reason, maybe, why parents and grandparents might like to consider tax-effective "pre-funding".